Review of Software as a Service and what it means to business

1. What is Software as a Service?
Introduction, Trends and Perspectives in Software as a Service
William M. Blake
President, eDocument Sciences, LLC
Phone: (716) 913-6676
e-mail: blake@edocumentsciences.com
www.edocumentsciences.com

2. What is SaaS?
SaaS = Software as a Service
• Deployment/Delivery model
– Hosted and Managed by vendor
– Delivered across the Internet
• Business model
– Usage-based pricing vs. perpetual license model
• Per user per month
• Per transaction
• Per GB of storage per month

3. Definition of SaaS
• Software offered as a service to multiple customers with the
following main characteristics:
• Standardization of software – eventually
customized for specific customers and
markets
• License based on usage – pay-as-you-go
• Service includes maintenance, support
and upgrades
• Data storage at SaaS vendor
• Web-based through Internet browser

4. Primary Drivers of SaaS
 Customers want a choice
 Changing economic & ecological conditions
 Changing competitive forces
 Changing workplace requirements
 Changing technologies
 Changing priorities & sourcing policies

5. Benefits of SaaS - Customers
• Lower entry point
– No large up-front investment in
• Software licenses
• IT infrastructure
• Lower operating/maintenance costs
– Fast, easy deployment (Web browser)
– Vendor maintains/upgrades application
– No IT staff necessary to keep running
• Consumption-based expenditure
– Pay As You Go (OpEx vs CapEx)
– Scale up/down as needed

6. Benefits of SaaS - Vendors
• Economies of Scale
– Derived from Multi-tenant architecture
• Better resource utilization
• Simplified maintenance
– Operating costs per customer drop as customer base grows
• Better understanding of usage patterns
– Drive innovation and enhancements
• Faster release cycles keeps up with market/competition
• De-facto access to Global market

7. What makes an application SaaS?
• Network-based access to commercially available software
• Multi-tenancy (one-to-many)
• Payment Model
• Central Application Management
– Software
– Infrastructure
• Control of Upgrade Process

8. SaaS vs. ASP
• ASP: Application Service Provider
– Single-tenant architecture (one customer per instance)
– Multiple instances running (as many as there are clients),
typically hosted by third parties
• Disadvantages
– Significant management overhead
– Difficult maintenance
– No economies of scale

9. SaaS Model
SaaS is different from on-premise software in more ways than one.

10. Business Functionality of SaaS
• Client/User Registration & Management
• Provisioning
• Billing & Payment Processing
• Performance Monitoring
• Usage Metering & Tracking
• Reporting
• Customer Service & Self-Service

11. SaaS Business Model Implications
• New sales & marketing approach
– Greater emphasis on web-centric cycle
• New sales & marketing compensation
• New release cycles and maintenance model
• New deployment/delivery approach
• New/higher expectations on customer service
• Uptime and SLA
• Professional Services

12. Shortcomings of Legacy on-premise Apps
• Deployment Challenges
– 31.1% of SW projects cancelled before completed
– 52.7% of projects cost nearly 190% of original estimates
• Operational Costs
– Maintenance & management costs >10x original license fee
– Escalating hardware & staff support costs
– Over provisioning and under-utilization of SW licenses
• Economic/Budgetary Pressures
– Need to reduce IT costs and increase business benefits
– Need to increase utilization to gain greater ROI

13. Changing Customer Expectations
Old New
• Capital Investment  Operating Expense
• Complex, Customize  Simple, Utilization
• Reactive Maintenance  Proactive Management
• Response Time  Ongoing Monitoring
• Customer Support  Automated Delivery
• Limited Responsibility  Higher Accountability
• Outsourcing Alternatives  Out-Tasking Options
Enterprises Seeking to Generate Greater ROI
at Lower TCO.

14. Equation for Greater Opportunities
Economy Tighter = Greater SaaS
+
Uncertainty Budgets Opportunities

15. SaaS Adoption Today
Source: THINKstrategies/Cutter Consortium © 2007

16. SaaS Deployment Plans
Source: THINKstrategies/Cutter Consortium © 2007

17. Gartner’s Slope of Enlightenment
Gartner’s Hype Cycle
You are here.

18. Living in a Hybrid World
• Most enterprises will seek mix of on-premise and
on-demand solutions
• Users prefer choice
• Users seeking on-demand/on-premise integration
• ‘Applets’, Appliances, etc. will permit off-line use and
synchronization